When it comes to investments, two of the biggest assets are often your home and a retirement account.
This week, advice on those topics is delivered by Gregory Lucas, a certified financial planner in Sacramento, Calif., and Jeffrey DeBoer, a wealth management adviser in Roseville, Calif.
QUESTION: I will be 70 years old in October. In my IRA I have a $115,000 cash account, plus a $65,000 bond with Citigroup. I also have $84,000 in a savings account. The monies were in mutual funds until early 2010. I began trusting no one's advice after Citigroup filed for Chapter 11 just before my bond was to mature. I'd been in the market since 1996 but asked my broker to sell everything. I'm stuck; I need to do something but don't know what. My broker advises buying an annuity with the $115,000. What's your advice?
ANSWER: I certainly understand how you must be feeling. With all that has happened in the economy over the past several years, it feels challenging to know what to do with your money.
With any investment decision, I recommend never doing anything you are not completely comfortable with. It is also very important that your overall investment strategy takes into account your age, income needs, risk tolerance and other objectives.
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It sounds like you have a large portion of your IRA sitting in cash, as well as a fairly significant amount in one bond. This concerns me because there can be too much risk in holding just one bond. Also, money market rates are currently below 1 percent.
I would recommend a more conservative allocation strategy, with a portion allocated to high-quality, short-term bonds and high-quality dividend-paying stocks.
You mentioned that your broker recommended an annuity for your IRA. In certain cases, some types of annuities make sense for a portion of a portfolio. Without knowing your overall situation, I can't say if it is right for you or not.
I recommend meeting with an adviser who takes the time to understand your personal objectives and who can make recommendations that you feel are in your best interests.
